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Can Google Save Old Media?

Digital Giant to Start Newspaper Trial

NEW YORK (AdAge.com) -- Sometime in the next two weeks, Google plans to switch on its Print Ads system for the first time, letting more than 100 advertisers bid for ad space in more than 50 daily newspapers over a three-month trial. And unlike in earlier experiments in which Google bought magazine ad space and re-sold it, sellers and buyers will interact directly through Google's system, meaning publishers can accept or reject bids at their discretion.
If the Print Ads test doesn't deliver new advertisers, of course, you can bet newspapers will do everything possible to kick Google back off its turf.
Old media's lifeline
With the participation of major papers from The New York Times to Gannett Co. titles, Google seems to have convinced publishers that the system really might deliver new advertisers without undercutting existing relationships and rates. EBay is making a similar assertion about its planned marketplace for TV spots. If the dot-coms prove their claims, new media may find itself playing the unusual role of lifeline for old media.

If the Print Ads test doesn't deliver new advertisers, of course, you can bet newspapers will do everything possible to kick Google back off its turf. But for now, everything is a tryout and everyone talks like friends.

"For publishers it's a way to get to a whole new universe of advertisers, which we will bring to the party and get to them without a lot of expense," said Tom Phillips, Google's director of Print Ads since March and, once upon a time, a co-founder of Spy magazine. "For advertisers it's a way to buy print media very efficiently, buy it across a broad array of alternatives and buy it at a price that the advertiser sets."

Bruce Telkamp, senior VP-business development and marketing, eHealth, said the service could streamline the cumbersome process of finding ad space around the country. "We do all of our media buying in-house, both online and offline," he said. "We're hopeful that through Google's aggregation of a large number of advertisers and the efficiencies the platform brings -- not only us, but potentially the papers themselves -- the program could have the potential to lower advertising costs, to bring efficiency to a less-than-efficient industry."

There was some concern among publishers when Google first confirmed its interest in the print game back in August 2005, the fear being that auctions might just drive prices down.

'It's an experiment'
Executives at the Times itself seem willing to find out. "Yes, it's an experiment," said Denise Warren, senior VP-chief advertising officer, New York Times Media Group. "We don't know how much it's going to yield. We always hope there is revenue at the end of the rainbow."

It doesn't hurt Google's latest bid that newspapers in general are continuing to lose print-edition readers. Eric Blankfein, senior VP-channel insights director, Horizon Media, suggested that newspapers' trouble might explain why Google is focusing on papers for this test instead of magazines, where it first began trials selling offline ads. (Although, at the American Magazine Conference in Phoenix last month, Google VP-Advertising Tim Armstrong made a strong pitch to the magazine industry to join Google in experimenting with some revenue-splitting models.)

"It's smarter to go to newspapers right now because they need more help," Mr. Blankfein said. "The model, whether it's half-baked or not, probably would augment any business that newspapers are getting and certainly offset the losses they've been experiencing. I don't see any downside for newspapers."

A lot at stake
As much potential as there seems to be, there is a lot at stake as well. For a sense of the players' vastly different scales, let's check 2005 results. The Times took in the most gross revenue of any U.S. paper, about $1.9 billion last year, according to Ad Age's 2006 Leading Media Companies report. Google reported 2005 revenue above $6.1 billion.

Nor do buyers or Google admit much possibility that media agencies could be cut out of the process -- or that big marketers could shop for rock-bottom pricing instead of negotiating with papers the way they do now. For one thing, many of the advertisers involved are too small to rate much attention anyway from the big agencies. Some of the big ones don't use newspapers much as it stands.

For another, Print Ads doesn't do everything agencies and direct negotiation do. Marketers can specify all kinds of things, like what section they want to appear in; where in the country they want to appear; what days of the week they're looking for; and, of course, how much they want to pay. They just can't specify everything -- nor do papers have to accept any offer they don't like.

Papers set ad format
"It doesn't guarantee competitive position," Mr. Phillips said. "It allows the newspaper to set the ad format so that, for instance, the big broadsheets will just accept quarter pages and less. So their big Verizon full-page clients will not be using this system."

Print Ads is also free for participants in this test. Google wants to eventually take cuts of the money changing hands but for now is just going to watch and see what happens.

Let's see if everyone is still friendly once results are in next March.